Hungry For A Solution To Rising Food Prices

Source: Bloomberg Business Week on MSNBC; By Eric Pooley and Philip Revzin

Tue, 2011-02-22 11:11

Even if global agriculture crisis doesn't turn cataclysmic, it represents a huge test.

As the Tunisian dictator Zine el Abidine Ben Ali discovered in January, there is no surer route to political oblivion than to deny people access to affordable food.

As the Tunisian dictator Zine el Abidine Ben Ali discovered in January, there is no surer route to political oblivion than to deny people access to affordable food. On Dec. 17, after Tunisian police assaulted a street vendor named Mohamed Bouazizi and seized his produce cart because, according to his family, he couldn't afford to pay bribes, the 26-year-old Bouazizi doused himself with accelerant and lit a match. He died two weeks later. The riots that ensued—propelled in part by anger over high food prices—drove Ben Ali from power and spread to Egypt, Jordan, Yemen, and Algeria. Ben Ali may be remembered as the despot who was toppled by a vegetable cart.

The hunger that has roiled the Middle East was not caused by the whims of autocrats and cops. It began last year with crippling drought in Russia and later Argentina, and torrential rains in Australia and Canada. The deluges in Saskatchewan were so sustained and intense that farmers couldn't plant some 10 million acres of wheat, according to the Canadian Wheat Board. "What is typically the driest province was never wetter," said the governmental agency Environment Canada.

Shrunken wheat harvests in those countries, along with cool, wet summer weather in the American Midwest that delayed the U.S. harvest, helped drive wheat prices at the Chicago Board of Trade up by 74% in the past year. Corn traded in Chicago rose by 87% during the same period. More recently, grain prices have spiked even higher because of yet another drought, this one threatening China's wheat crop, the world's largest. In that country's eight major wheat-producing provinces, some 42% of winter wheat cropland has been hurt by a dry spell, according to Agriculture Minister Han Changfu.